By Thomas and Robert Fross, Co-foundersNEW YORK ( Fross & Fross Wealth Management) -- With equities at or near new highs in the first quarter, plenty of analysts say that the markets will run out of steam, as they did in 2011 and 2012. However, we think that the situation is fundamentally different in 2013 and that the markets still have room to run.
Here's why: 1. This is one of the most unbelieved rallies we've ever seen, and it has hung in there despite the odds. Retail investors remain skeptical and we think that there's a lot of money sitting on the sidelines. A look at the Investment Company Institute's statistics on money market accounts tells us that there is still a lot of cash parked in institutional and retail money market accounts that could be injected into equities. For the rally to continue, retail investors will have to jump in more aggressively, and there's evidence to suggest that some already have. A TD Ameritrade sentiment index shows that retail investors have been buying stocks more assertively than they have in the last three years, and the latest ICI report shows that total money market assets dropped by $16.7 billion, to $2.646 trillion, during the week ended March 6, showing that investors are moving out of cash. 2. Loose monetary policy. This is the rally that Bernanke built and it looks like "QE Infinity" is here to stay. The market has been booming largely because of the concerted efforts of the Fed and central banks around the world to drive growth by forcing down bond yields, pushing return-seeking investors into riskier assets and restoring confidence in the global economy.